Latest / Boardroom Conversations with Fexingo: CEOs, Strategy, and Corporate Leadership Explained / How the Ferrari Board Protected the Brand
Transcript
- Lucas: So Ferrari — the company — makes around eleven thousand cars a year. That's fewer than a single busy Toyota plant produces in a week. And yet it's one of the most valuable carmakers on earth, with a valuation that makes tech companies jealous. Luna: Right, and it's not because of volume. It's because of what the board refuses to do. Lucas: Exactly. And that's the angle I want to dig into today: how Ferrari's board has protected the brand by deliberately limiting growth. Not by accident, but by design — even when shareholders might want more cars, more revenue, more profit. Luna: So it's a case study in saying no. Which in today's market is almost radical. Lucas: It is. And to understand it, you have to go back to the IPO in 2015. When Ferrari listed on the New York Stock Exchange, there was real pressure to ramp up production. Analysts were projecting they could easily sell thirty thousand cars a year if they expanded the range. Luna: But they didn't. They've stayed around ten to twelve thousand. Lucas: And that's been a deliberate board-level decision. The former CEO, Sergio Marchionne, was very open about this. He said the biggest risk to Ferrari was growing too fast and tarnishing the brand. So the board set a hard cap on volume, tied to exclusivity. Luna: And that cap has held even as the company expanded into SUVs and hybrid supercars. The Purosangue is a great example. Lucas: The Purosangue — that's their first-ever four-door, four-seat vehicle, launched in 2022. It's basically an SUV, though Ferrari hates that word. And when they announced it, the immediate worry was: is this the moment Ferrari sells out? Are they chasing the Porsche market? Luna: But they didn't. They capped production at — what was it — around twenty percent of total output? Lucas: Right, they said they'd never let the Purosangue account for more than about twenty percent of annual production. That's a board-level constraint, baked into how they allocate capacity. And they also kept the waiting list long, which actually adds to the allure. Luna: So scarcity isn't a side effect. It's the strategy. Lucas: And it shows in the numbers. Ferrari's gross margin is around 50 percent, which is more like a luxury goods company than a carmaker. In 2025, their net profit per car was over one hundred thousand euros. That's insane, and it's a direct result of the board's discipline on volume. Luna: And that discipline extends to the brand itself. They've been careful about licensing and sponsorships too. Lucas: Yes. The Ferrari logo is everywhere — on watches, phones, even a theme park — but the board has strict rules about where the logo can appear and what it can be attached to. It's about maintaining a certain prestige. They've turned down licensing deals worth hundreds of millions because they didn't fit the brand. Luna: So it's not just about car volume. It's about controlling the entire brand ecosystem. Lucas: And that's where the board's role gets interesting. Because this kind of restraint is hard to maintain when you have public shareholders. But Ferrari has a dual-class structure — the Agnelli family, through Exor, controls the voting majority. That gives the board the cover to make long-term decisions without worrying about quarterly pressure. Luna: So family control actually enables the scarcity strategy. And it's the same reason Hermès was able to fight off LVMH. Lucas: Exactly the same logic. In both cases, the controlling shareholders prioritize the brand's integrity over near-term profit. And it pays off — Ferrari's stock has outperformed the S&P 500 since the IPO, and its price to earnings ratio is comparable to LVMH's. Luna: But there's a flip side, isn't there? What happens when the brand's exclusivity starts to hurt growth? Lucas: That's the tension. Ferrari's market cap is enormous because investors believe the brand can command a premium forever. But if the board ever caves and starts chasing volume, that premium could evaporate overnight. So the risk is real — but it's a risk they've managed well so far. Luna: And that's the thing — it's a fine line between scarcity and stagnation. If they never introduce new models, they risk losing relevance with younger buyers. Lucas: Right, so they have to innovate — but within a narrow lane. The Purosangue was a calculated step. And they're also investing heavily in electrification, with hybrid models now a big chunk of sales. But the board has said they won't go full electric by a set date — they'll transition at their own pace. Luna: Interesting. So they're applying the same approach to technology as they do to volume: cautious, deliberate, not chasing trends. Lucas: And that's a lesson for any company whose value is really in its brand. Whether you're a luxury carmaker or a software firm, the board has to ask: what makes us special, and how do we protect it? Sometimes that means saying no to opportunities that look great on paper. Luna: It's a bit like the way we approach this podcast. We focus on one solid topic, not trying to cover everything. And that's only possible because listeners like you support the show. Lucas: That's a fair analogy. And if you find these conversations useful in your own work or thinking, you can support us by buying us a coffee at buy me a coffee dot com slash fexingo. It keeps the show free and independent. Luna: And we genuinely appreciate that. Now, back to Ferrari — there's a recent example that shows how the board handles a crisis of brand dilution. Lucas: You're talking about the virtual brand, right? The whole crypto nft thing. Luna: Yeah. In 2022, Ferrari said it would start selling digital assets — NFTs — and even accept cryptocurrency for its cars. That seemed like a departure from the careful brand management they're known for. Lucas: And the board was quick to walk it back or at least frame it carefully. They said it was about engaging with a new generation of collectors, not about chasing the crypto fad. But they made sure the digital offerings were just as exclusive and limited as their cars. Luna: So even in the digital world, they apply the same scarcity rules. Lucas: Yes. And that's the key takeaway: the board's job is to ensure that every extension of the brand—whether it's an SUV, a watch, or a digital collectible—maintains the same aura of exclusivity. If they ever let that slip, the entire business model breaks. Luna: So what's the number that captures this? Is it the profit per car? Lucas: I'd say that's the clearest one: around one hundred thousand euros per vehicle. But even more telling is the waiting list. In 2025, some models had wait times of over two years. And that's not a problem — that's the point. Luna: It's like the opposite of what most carmakers do. They want to sell as many as possible. Ferrari wants to sell as few as possible while still making a fortune. Lucas: And that's a hard concept for some investors to swallow. But the board has been consistent. They've even talked about the possibility of producing fewer cars in the future if it protects the brand. That's a level of discipline you rarely see in corporate America. Luna: So what would break this model? What keeps the board up at night? Lucas: Probably the temptation of the next big thing. There's always pressure to expand into new markets, new segments. But the bigger risk might be losing the human touch. Ferrari's value is tied to its heritage, its racing pedigree, the craftsmanship. If they industrialize too much, they lose that. Luna: So it's about staying true to the core, even when the market rewards diversification. Lucas: Exactly. And that's the lesson for any board: know what your company's moat is, and don't let short-term growth dig it away. Ferrari's board has made saying no an art form. And in a world obsessed with growth, that's a rare and valuable skill.